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LIBOR Rates (Blog or Resources)

Current LIBOR Rate Update: May 2020

Posted on

This blog provides the most current LIBOR rate data as of May 7, 2020, along with a brief overview of the meaning of LIBOR and how it applies to variable-rate student loans. For more information on how LIBOR affects variable rate loans, read our blog, LIBOR: What It Means for Student Loans.

 

What is LIBOR?

The London Interbank Offered Rate (LIBOR) is a money market interest rate that is considered to be the standard in the interbank Eurodollar market. In short, it is the rate at which international banks are willing to offer Eurodollar deposits to one another. Many variable rate loans and lines of credit, such as mortgages, credit cards, and student loans, base their interest rates on the LIBOR rate.

 

How LIBOR Affects Variable Rate Student Loans

If you have variable-rate student loans, changes to the LIBOR impact the interest rate you’ll pay on the loan throughout your repayment. Private student loans, including refinanced student loans, have interest rates that are tied to an index, such as LIBOR. But that’s not the rate you’ll pay. The lender also adds a margin that is based on your credit – the better your credit, the lower the margin. By adding the LIBOR rate to the margin along with any other fees or charges that may be included, you can determine your annual percentage rate (APR), which is the full cost a lender charges you per year for funds expressed as a percentage. Your APR is the actual amount you pay.

 

LIBOR Maturities

There are seven different maturities for LIBOR, including overnight, one week, one month, two months, three months, six months, and twelve months. The most commonly quoted rate is the three-month U.S. dollar rate. Some student loan companies, including ELFI, adjust their interest rates every quarter based on the three-month LIBOR rate.

 

Current 1 Month LIBOR Rate – May 2020

As of May 7, 2020, the 1 month LIBOR rate is 0.20%. If the lender sets their margin at 3%, your new rate would be 3.20% (0.20% + 3.00%=3.20%). The chart below displays fluctuations in the 1 month LIBOR rate over time.

 

(Source: macrotrends.net)

 

 

Current 3 Month LIBOR Rate – May 2020

As of May 7, 2020, the 3 month LIBOR rate is 0.43%. If the lender sets their margin at 3%, your new rate would be 3.43% (0.43% + 3.00%=3.43%). The chart below displays fluctuations in the 3 month LIBOR rate over time.

 

Chart of 3 Month LIBOR for May 2020

(Source: macrotrends.net)

 

Current 6 Month LIBOR Rate – May 2020

As of May 7, 2020, the 6 month LIBOR rate is 0.69%. If the lender sets their margin at 3%, your new rate would be 3.69% (0.69% + 3.00%=3.69%). The chart below displays fluctuations in the 6 month LIBOR rate over time.

 

Chart of 6 Month LIBOR May 2020

(Source: macrotrends.net)

 

Current 1 Year LIBOR Rate – May 2020

As of May 7, 2020, the 1 year LIBOR rate is 0.78%. If the lender sets their margin at 3%, your new rate would be 3.78% (0.78% + 3.00%=3.78%). The chart below displays fluctuations in the 1 year LIBOR rate over time.

 

Chart of 1 Year LIBOR May 2020

(Source: macrotrends.net)

 

Understanding LIBOR

If you are planning to refinance your student loans or take out a personal loan or line of credit, understanding how the LIBOR rate works can help you choose between a fixed or variable-rate loan. Keep in mind that ELFI has some of the lowest student loan refinancing rates available, and you can prequalify in minutes without affecting your credit score.* Keep up with the ELFI blog for monthly updates on the current 1 month, 3 month, 6 month, and 1 year LIBOR rate data.

 


 

*Subject to credit approval. Terms and conditions apply.

 

Notice About Third Party Websites: Education Loan Finance by SouthEast Bank is not responsible for and has no control over the subject matter, content, information, or graphics of the websites that have links here. The portal and news features are being provided by an outside source – the bank is not responsible for the content. Please contact us with any concerns or comments.

Current LIBOR Rate Update: April 2020

Posted on

This blog provides the most current LIBOR rate data as of April 9, 2020, along with a brief overview of the meaning of LIBOR and how it applies to variable-rate student loans. For more information on how LIBOR affects variable rate loans, read our blog, LIBOR: What It Means for Student Loans.

 

What is LIBOR?

The London Interbank Offered Rate (LIBOR) is a money market interest rate that is considered to be the standard in the interbank Eurodollar market. In short, it is the rate at which international banks are willing to offer Eurodollar deposits to one another. Many variable rate loans and lines of credit, such as mortgages, credit cards, and student loans, base their interest rates on the LIBOR rate.

 

How LIBOR Affects Variable Rate Student Loans

If you have variable-rate student loans, changes to the LIBOR impact the interest rate you’ll pay on the loan throughout your repayment. Private student loans, including refinanced student loans, have interest rates that are tied to an index, such as LIBOR. But that’s not the rate you’ll pay. The lender also adds a margin that is based on your credit – the better your credit, the lower the margin. By adding the LIBOR rate to the margin along with any other fees or charges that may be included, you can determine your annual percentage rate (APR), which is the full cost a lender charges you per year for funds expressed as a percentage. Your APR is the actual amount you pay.

 

LIBOR Maturities

There are seven different maturities for LIBOR, including overnight, one week, one month, two months, three months, six months, and twelve months. The most commonly quoted rate is the three-month U.S. dollar rate. Some student loan companies, including ELFI, adjust their interest rates every quarter based on the three-month LIBOR rate.

 

Current 1 Month LIBOR Rate – April 2020

As of Thursday, April 9, 2020, the 1 month LIBOR rate is 0.81%. If the lender sets their margin at 3%, your new rate would be 3.81% (0.81% + 3.00%=3.81%). The chart below displays fluctuations in the 1 month LIBOR rate over time.

 

Chart of 1 Month LIBOR April 2020

(Source: macrotrends.net)

 

 

Current 3 Month LIBOR Rate – April 2020

As of Thursday, April 9, 2020, the 3 month LIBOR rate is 1.22%. If the lender sets their margin at 3%, your new rate would be 4.22% (1.22% + 3.00%=4.22%). The chart below displays fluctuations in the 3 month LIBOR rate over time.

 

Chart of 3 Month LIBOR April 2020

(Source: macrotrends.net)

 

Current 6 Month LIBOR Rate – April 2020

As of Thursday, April 9, 2020, the 6 month LIBOR rate is 1.23%%. If the lender sets their margin at 3%, your new rate would be 4.23% (1.23% + 3.00%=4.23%). The chart below displays fluctuations in the 6 month LIBOR rate over time.

 

Chart of 6 Month LIBOR April 2020

(Source: macrotrends.net)

 

Current 1 Year LIBOR Rate – April 2020

As of Thursday, April 9, 2020,, the 1 year LIBOR rate is 1.05%. If the lender sets their margin at 3%, your new rate would be 4.05% (1.05% + 3.00%=4.05%). The chart below displays fluctuations in the 1 year LIBOR rate over time.

 

Chart of 1 Year LIBOR April 2020

(Source: macrotrends.net)

 

Understanding LIBOR

If you are planning to refinance your student loans or take out a personal loan or line of credit, understanding how the LIBOR rate works can help you choose between a fixed or variable-rate loan. Keep in mind that ELFI has some of the lowest student loan refinancing rates available, and you can prequalify in minutes without affecting your credit score.* Keep up with the ELFI blog for monthly updates on the current 1 month, 3 month, 6 month, and 1 year LIBOR rate data.

 


 

*Subject to credit approval. Terms and conditions apply.

 

Notice About Third Party Websites: Education Loan Finance by SouthEast Bank is not responsible for and has no control over the subject matter, content, information, or graphics of the websites that have links here. The portal and news features are being provided by an outside source – the bank is not responsible for the content. Please contact us with any concerns or comments.

Current LIBOR Rate Update: March 2020

Posted on

This blog provides the most current LIBOR rate data as of March 17, 2020, along with a brief overview of the meaning of LIBOR and how it applies to variable-rate student loans. For more information on how LIBOR affects variable rate loans, read our blog, LIBOR: What It Means for Student Loans.

 

What is LIBOR?

The London Interbank Offered Rate (LIBOR) is a money market interest rate that is considered to be the standard in the interbank Eurodollar market. In short, it is the rate at which international banks are willing to offer Eurodollar deposits to one another. Many variable rate loans and lines of credit, such as mortgages, credit cards, and student loans, base their interest rates on the LIBOR rate.

 

How LIBOR Affects Variable Rate Student Loans

If you have variable-rate student loans, changes to the LIBOR impact the interest rate you’ll pay on the loan throughout your repayment. Private student loans, including refinanced student loans, have interest rates that are tied to an index, such as LIBOR. But that’s not the rate you’ll pay. The lender also adds a margin that is based on your credit – the better your credit, the lower the margin. By adding the LIBOR rate to the margin along with any other fees or charges that may be included, you can determine your annual percentage rate (APR), which is the full cost a lender charges you per year for funds expressed as a percentage. Your APR is the actual amount you pay.

 

LIBOR Maturities

There are seven different maturities for LIBOR, including overnight, one week, one month, two months, three months, six months, and twelve months. The most commonly quoted rate is the three-month U.S. dollar rate. Some student loan companies, including ELFI, adjust their interest rates every quarter based on the three-month LIBOR rate.

 

Current 1 Month LIBOR Rate – March 2020

As of Monday, March 17, 2020, the 1 month LIBOR rate is 0.75%. If the lender sets their margin at 3%, your new rate would be 3.75% (0.75% + 3.00%=3.75%). The chart below displays fluctuations in the 1 month LIBOR rate over the past year.

 

(Source: macrotrends.net)

 

 

Current 3 Month LIBOR Rate – March 2020

As of Monday, March 17, 2020, the 3 month LIBOR rate is 1.05%%. If the lender sets their margin at 3%, your new rate would be 4.05% (1.05% + 3.00%=4.05%). The chart below displays fluctuations in the 3 month LIBOR rate over the past year.

 

(Source: macrotrends.net)

 

Current 6 Month LIBOR Rate – March 2020

As of Monday, March 17, 2020, the 6 month LIBOR rate is 0.91%%. If the lender sets their margin at 3%, your new rate would be 3.91% (0.91% + 3.00%=3.91%). The chart below displays fluctuations in the 6 month LIBOR rate over the past year.

 

(Source: macrotrends.net)

 

Current 1 Year LIBOR Rate – March 2020

As of Monday, March 17, 2020, the 1 year LIBOR rate is 0.86%. If the lender sets their margin at 3%, your new rate would be 3.86% (0.86% + 3.00%=3.86%). The chart below displays fluctuations in the 1 year LIBOR rate over the past year.

 

(Source: macrotrends.net)

 

Understanding LIBOR

If you are planning to refinance your student loans or take out a personal loan or line of credit, understanding how the LIBOR rate works can help you choose between a fixed or variable-rate loan. Keep in mind that ELFI has some of the lowest student loan refinancing rates available, and you can prequalify in minutes without affecting your credit score.* Keep up with the ELFI blog for monthly updates on the current 1 month, 3 month, 6 month, and 1 year LIBOR rate data.

 


 

*Subject to credit approval. Terms and conditions apply.

 

Notice About Third Party Websites: Education Loan Finance by SouthEast Bank is not responsible for and has no control over the subject matter, content, information, or graphics of the websites that have links here. The portal and news features are being provided by an outside source – the bank is not responsible for the content. Please contact us with any concerns or comments.

Current LIBOR Rate Update: February 2020

Posted on

This blog provides the most current LIBOR rate data as of February 10, 2020, along with a brief overview of the meaning of LIBOR and how it applies to variable-rate student loans. For more information on how LIBOR affects variable rate loans, read our blog, LIBOR: What It Means for Student Loans.

 

What is LIBOR?

The London Interbank Offered Rate (LIBOR) is a money market interest rate that is considered to be the standard in the interbank Eurodollar market. In short, it is the rate at which international banks are willing to offer Eurodollar deposits to one another. Many variable rate loans and lines of credit, such as mortgages, credit cards, and student loans, base their interest rates on the LIBOR rate.

 

How LIBOR Affects Variable Rate Student Loans

If you have variable-rate student loans, changes to the LIBOR impact the interest rate you’ll pay on the loan throughout your repayment. Private student loans, including refinanced student loans, have interest rates that are tied to an index, such as LIBOR. But that’s not the rate you’ll pay. The lender also adds a margin that is based on your credit – the better your credit, the lower the margin. By adding the LIBOR rate to the margin along with any other fees or charges that may be included, you can determine your annual percentage rate (APR), which is the full cost a lender charges you per year for funds expressed as a percentage. Your APR is the actual amount you pay.

 

LIBOR Maturities

There are seven different maturities for LIBOR, including overnight, one week, one month, two months, three months, six months, and twelve months. The most commonly quoted rate is the three-month U.S. dollar rate. Some student loan companies, including ELFI, adjust their interest rates every quarter based on the three-month LIBOR rate.

 

Current 1 Month LIBOR Rate – February 2020

As of Monday, February 10, 2020, the 1 month LIBOR rate is 1.66%. If the lender sets their margin at 3%, your new rate would be 4.66% (1.67% + 3.00%=4.66%). The chart below displays fluctuations in the 1 month LIBOR rate over the past year.

 

Chart displaying current 1 month LIBOR rate as of February 10, 2020.

(Source: macrotrends.net)

 

 

Current 3 Month LIBOR Rate – February 2020

As of Monday, February 10, 2020, the 3 month LIBOR rate is 1.71%. If the lender sets their margin at 3%, your new rate would be 4.71% (1.71% + 3.00%=4.71%). The chart below displays fluctuations in the 3 month LIBOR rate over the past year.

 

Chart displaying current 3 month LIBOR rate as of February 10, 2020.

(Source: macrotrends.net)

 

Current 6 Month LIBOR Rate – February 2020

As of Monday, February 10, 2020, the 3 month LIBOR rate is 1.72%. If the lender sets their margin at 3%, your new rate would be 4.72% (1.72% + 3.00%=4.72%). The chart below displays fluctuations in the 6 month LIBOR rate over the past year.

 

Chart displaying current 6 month LIBOR rate as of February 10, 2020.

(Source: macrotrends.net)

 

Current 1 Year LIBOR Rate – February 2020

As of Monday, February 10, 2020, the 1 year LIBOR rate is 1.80%. If the lender sets their margin at 3%, your new rate would be 4.80% (1.80% + 3.00%=4.80%). The chart below displays fluctuations in the 1 year LIBOR rate over the past year.

 

Chart displaying current 1 year LIBOR rate as of February 10, 2020.

(Source: macrotrends.net)

 

Understanding LIBOR

If you are planning to refinance your student loans or take out a personal loan or line of credit, understanding how the LIBOR rate works can help you choose between a fixed or variable-rate loan. Keep in mind that ELFI has some of the lowest student loan refinancing rates available, and you can prequalify in minutes without affecting your credit score.* Keep up with the ELFI blog for monthly updates on the current 1 month, 3 month, 6 month, and 1 year LIBOR rate data.

 


 

*Subject to credit approval. Terms and conditions apply.

 

Notice About Third Party Websites: Education Loan Finance by SouthEast Bank is not responsible for and has no control over the subject matter, content, information, or graphics of the websites that have links here. The portal and news features are being provided by an outside source – the bank is not responsible for the content. Please contact us with any concerns or comments.

Current LIBOR Rate Update: January 2020

Posted on

This blog provides the most current LIBOR rate data as of January 15, 2020, along with a brief overview of the meaning of LIBOR and how it applies to variable-rate student loans. For more information on how LIBOR affects variable rate loans, read our blog LIBOR: What It Means for Student Loans.

 

What is LIBOR?

The London Interbank Offered Rate (LIBOR) is a money market interest rate that is considered to be the standard in the interbank Eurodollar market. In short, it is the rate at which international banks are willing to offer Eurodollar deposits to one another. Many variable rate loans and lines of credit, such as mortgages, credit cards, and student loans, base their interest rates on the LIBOR rate.

 

How LIBOR Affects Variable Rate Student Loans

If you have variable-rate student loans, changes to the LIBOR impact the interest rate you’ll pay on the loan throughout your repayment. Private student loans, including refinanced student loans, have interest rates that are tied to an index, such as LIBOR. But that’s not the rate you’ll pay. The lender also adds a margin that is based on your credit – the better your credit, the lower the margin. By adding the LIBOR rate to the margin along with any other fees or charges that may be included, you can determine your annual percentage rate (APR), which is the full cost a lender charges you per year for funds expressed as a percentage. Your APR is the actual amount you pay.

 

LIBOR Maturities

There are seven different maturities for LIBOR, including overnight, one week, one month, two months, three months, six months, and twelve months. The most commonly quoted rate is the three-month U.S. dollar rate. Some student loan companies, including ELFI, adjust their interest rates every quarter based on the three-month LIBOR rate.

 

Current 1 Month LIBOR Rate – January 2020

As of Wednesday, January 15, 2020, the 1 month LIBOR rate is 1.67%. If the lender sets their margin at 3%, your new rate would be 4.67% (1.67% + 3.00%=4.67%). The chart below displays fluctuations in the 1 month LIBOR rate over the past year.

 

Chart displaying current 1 month LIBOR rate as of January 15, 2020.

(Source: macrotrends.net)

 

 

Current 3 Month LIBOR Rate – January 2020

As of Wednesday, January 15, 2020, the 3 month LIBOR rate is 1.84%. If the lender sets their margin at 3%, your new rate would be 4.84% (1.84% + 3.00%=4.84%). The chart below displays fluctuations in the 3 month LIBOR rate over the past year.

 

Chart displaying current 3 month LIBOR rate as of January 15, 2020.

(Source: macrotrends.net)

 

Current 6 Month LIBOR Rate – January 2020

As of Wednesday, January 15, 2020, the 3 month LIBOR rate is 1.87%. If the lender sets their margin at 3%, your new rate would be 4.87% (1.87% + 3.00%=4.87%). The chart below displays fluctuations in the 6 month LIBOR rate over the past year.

 

Chart displaying current 6 month LIBOR rate as of January 15, 2020.

(Source: macrotrends.net)

 

Current 1 Year LIBOR Rate – January 2020

As of Wednesday, January 15, 2020, the 1 year LIBOR rate is 1.95%. If the lender sets their margin at 3%, your new rate would be 4.95% (1.95% + 3.00%=4.95%). The chart below displays fluctuations in the 1 year LIBOR rate over the past year.

 

Chart displaying current 1 year LIBOR rate as of January 15, 2020.

(Source: macrotrends.net)

 

Understanding LIBOR

If you are planning to refinance your student loans or take out a personal loan or line of credit, understanding how the LIBOR rate works can help you choose between a fixed or variable-rate loan. Keep in mind that ELFI has some of the lowest student loan refinancing rates available, and you can prequalify in minutes without affecting your credit score.* Keep up with the ELFI blog for monthly updates on the current 1 month, 3 month, 6 month, and 1 year LIBOR rate data.

 


 

*Subject to credit approval. Terms and conditions apply.

 

Notice About Third Party Websites: Education Loan Finance by SouthEast Bank is not responsible for and has no control over the subject matter, content, information, or graphics of the websites that have links here. The portal and news features are being provided by an outside source – the bank is not responsible for the content. Please contact us with any concerns or comments.

LIBOR: What It Means for Student Loans

Posted on

By Kat Tretina

Kat Tretina is a freelance writer based in Orlando, Florida. Her work has been featured in publications like The Huffington Post, Entrepreneur, and more. She is focused on helping people pay down their debt and boost their income.

 

If you decide to refinance your student loans, you’re likely looking for the lowest interest rate possible. If you want to pay off your debt aggressively, you may get a lower rate by opting for a variable rate loan rather than a fixed-rate loan.

 

While a variable rate loan may be a smart choice, it’s important to understand how lenders determine your interest rate and what factors may influence it, such as the LIBOR rate.

 

Continue reading to learn more about the LIBOR rate and how it affects your student loan repayment.

 

What is LIBOR?

To understand LIBOR, you must first understand Eurodollars. Eurodollars are bank deposit liabilities — written as U.S. dollars — that don’t fall under U.S. banking regulations. Banks that offer Eurodollars are usually located outside of the United States, and play a big role in the financial industry.

 

The London Interbank Offered Rate (LIBOR) is a money market interest rate that is considered to be the standard in the interbank Eurodollar market. It’s a market for banks and financial institutions, rather than individuals. The LIBOR rate is the rate at which international banks are willing to offer Eurodollar deposits to one another.

 

That all may sound very complex and confusing, and you may be wondering why it matters to you. But the LIBOR rate can affect you directly. Many adjustable-rate loans and lines of credit, such as mortgages, credit cards, and student loans, base their interest rates on the LIBOR rate.

 

How LIBOR affects your variable rate loans

When you apply for a loan, you can often choose between a fixed-rate loan and a variable rate loan. A fixed-rate loan has the same interest rate for the length of your repayment. It never changes, no matter what the market does. By contrast, variable rate loans usually have lower rates than fixed-rate loans for the same term at first. However, they can fluctuate over time to coincide with market changes.

 

If you have variable rate student loans, changes to the LIBOR impact the interest rate you’ll pay on the loan throughout your repayment.

 

Private student loans, including refinancing loans, have interest rates that are tied to an index, such as LIBOR. But that’s not the rate you’ll pay. The lender also adds a margin that is based on your credit; the better your credit, the lower the margin.

 

Your annual percentage rate, or APR, is a way of measuring the full cost a lender charges you per year for funds, and is expressed as a percentage. Your APR can be determined by adding the LIBOR rate to the margin, and including the cost of other fees and charges (if any exist) averaged over the term of the loan. If the LIBOR rate increases, the interest rate on your student loan will increase as well.

 

LIBOR Rate + Margin = Your Interest Rate

There are different maturities for LIBOR, including overnight, one week, one month, two months, three months, six months, and twelve months. Some student loan companies, including ELFI, adjust their interest rates every quarter based on the three-month LIBOR rate, while others adjust rates monthly as their loans are tied to the one-month LIBOR.

 

The LIBOR rate can fluctuate a great deal. However, most private student loan companies have caps on the interest rate, meaning your interest rate will never exceed that amount, no matter how high the LIBOR rate becomes.

 

Current LIBOR rates

As of Friday, November 22, 2019 — the last available data — the LIBOR rate is 1.917%. If the lender sets their margin at 3%, your new rate would be 4.917% (1.917% + 3.00%=4.917%).

 

The current LIBOR rate is significantly lower than it was at the beginning of 2019. On January 2, 2019, the LIBOR rate was 2.79%.

 

LIBOR rate trends

The LIBOR rate rises and falls along with market changes. Over the past 10 years, the three-month LIBOR rate has generally increased.

 

On December 2, 2009, the LIBOR rate was just 0.255%. As of November 22, 2019, the rate was 1.917%. If you had a variable rate loan during that time, that change means your rate would have risen by 1.662%.

 

The chart above displays fluctuations to the 3-month LIBOR based on the U.S. dollar from 2010-2019.

 

Future of LIBOR

LIBOR has been the gold standard that lenders have used for years to determine their rates. However, LIBOR is slowly being phased out and will be replaced with a new index.

 

LIBOR is based on transactions that aren’t as common as they used to be, so the index is considered to be less reliable than it once was. LIBOR is expected to be discontinued sometime after 2021.

 

How will that affect interest rates? The Federal Reserve has convened a committee to facilitate the transition and has recommended a new index to replace LIBOR. Lenders will likely replace LIBOR with the recommended index, or with the U.S. Prime Rate. Be sure to check your student loan documents (typically your Application & Credit Agreement) to better understand the terms of replacing the LIBOR index with a replacement index if you have a variable rate loan.

 

Managing your debt

If you’re planning on refinancing your student loans and are trying to decide between a fixed-rate loan and a variable rate loan, learning about the LIBOR rate can help you make an informed choice. If you want to see how much money you can save with refinancing and what interest rate you can qualify for, use ELFI’s Find My Rate tool to get a quote.*

 


 

*Subject to credit approval. Terms and conditions apply. Variable rates may increase after closing.

 

Notice About Third Party Websites: Education Loan Finance by SouthEast Bank is not responsible for and has no control over the subject matter, content, information, or graphics of the websites that have links here. The portal and news features are being provided by an outside source – the bank is not responsible for the content. Please contact us with any concerns or comments.

LIBOR Rates, Historical LIBOR Rates, and Variable Rate Loans

Posted on
Updated December 20, 2019

Variable rate loans have interest rates that vary and are based on a financial market index that changes over time. One very well-known financial market index that many variable rate loans are based upon is the London Interbank Offer Rate, or LIBOR. Understanding this financial index and how it is determined is important when evaluating variable rate loan products.

What are LIBOR Rates?

LIBOR is a benchmark rate that banks charge each other to borrow money. More important to borrowers, however, is that this rate is the first step involved in calculating short-term interest rates on a variety of loans — like student loans, mortgages, credit cards, etc. LIBOR is determined daily and is based on rates that a reference panel of banks can borrow from other banks on the London market for each calculated currency, including the U.S. dollar (USD), Euro (EUR), pound sterling (GBP), Japanese yen (JPY), and Swiss franc (CHF).

 

>> Related: LIBOR: What it Means for Student Loans

 

You may have noticed that the definition of LIBOR is included when calculating rates for variable rate loans. LIBOR’s seven available maturities and associated rates are: overnight, one week, and 1, 2, 3, 6, and 12 months. These maturity figures state the cyclical duration for which the variable interest rate can change on your loan. For instance, the interest rate on a one-week term can change weekly, and the 3-month term can change every 3 months (or quarterly). Because these cyclical changes may change your loan’s interest rate, it is important to note that your monthly payment and the total expected interest owed over the life of the loan may change as well.

 

To see which maturity is associated with your variable rate loan, look for the timeframe before the word LIBOR found on your promissory note. You can also read the loan agreement to understand how often the interest rate is subject to adjustment and understand how to identify the correct index amount.  For example, Education Loan Finance’s variable rate loans are subject to adjustment quarterly based upon the 3-month LIBOR, while other lenders may adjust rates more frequently by basing rates upon the 1-month LIBOR.

LIBOR Changes and Your Interest Rate

While variable rate loans, whether refinanced or not, tend to have starting rates that are often lower than fixed loan rates for the same maturity date, these variable rates can change after you close on your loan — including the possibility to increase over the life of your loan. Changes in LIBOR result in changes to your variable rate loan’s interest rate.

 

Here is how it works: If the 3-month LIBOR is 0.4 percent and Education Loan Finance’s (or your lending institution’s) margin is 3 percent, then your monthly rate would be 3.40 percent for those three months. However, if the 3-month LIBOR changes to 1 percent in the next quarter (remember, this scenario is working on a 3-month cyclical change), then your monthly rate would increase to 4 percent for those next three months.

 

If the LIBOR increases dramatically to a rate such as 15 percent, Education Loan Finance actually puts a 9.95 percent interest rate cap on the interest rate that you will be charged for 5, 7, 10, 15, or 20-year variable rate loan terms. This means that no matter how high the LIBOR rate increases, you will never pay more than 9.95 percent interest on the aforementioned variable rate loans if you choose a variable rate loan and refinance your student loan with Education Loan Finance.*

 

What are Historical LIBOR Rates?

Historical LIBOR shows borrowers and consumers the variability in rates over the years. These historical data provide insight into the magnitude of LIBOR rate changes in the past.

 

Historical LIBOR rates can be reviewed and downloaded here. Simply change the frequency to the desired maturity and make sure the date range is accurate. Scroll down and select ‘download data’ to view the rates for your selected time period. Another option is to view multiple maturities at one time, over thirty years, on this scrolling chart. Whichever you choose, please note that these links are provided for historical purposes only. You should always refer to the terms of your promissory note for details  — like date, source, time period — on how the rate for your loan will be determined.

 

Like many lending or refinancing institutions, Education Loan Finance’s variable rate loans are tied to 3-month LIBOR rates, which means they are subject to change based on this publicly available index. The big takeaway is that while there are no guarantees with variable rates, they do tend to start at lower rates than rates on fixed-rate loans with the same term. If you decide to initially refinance your student loan debt with a variable rate loan product, just remember that if rates begin to increase, you can refinance again in the future with a fixed rate loan from Education Loan Finance at no cost to you.

 

Top Tips for Finding the Perfect Lender to Refinance Student Loans

 


 

*Subject to credit approval. Terms and conditions apply.

 

Notice About Third Party Websites: Education Loan Finance by SouthEast Bank is not responsible for and has no control over the subject matter, content, information, or graphics of the websites that have links here. The portal and news features are being provided by an outside source – the bank is not responsible for the content. Please contact us with any concerns or comments.